Reflecting experiences under the Mitigation Momentum Project

Transcription

1 June 2013 Measuring, Reporting and Verifying Nationally Appropriate Mitigation Actions Reflecting experiences under the Mitigation Momentum Project Discussion paper Authors: Caroline De Vit, Frauke Röser and Hanna Fekete With contributions from: Niklas Höhne, Sina Wartmann, Xander van Tilburg, Julia Larkin, Donovan Escalante, Gesine Hänsel, Karina Veum, Lachlan Cameron and Jacob Halcomb

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3 Acknowledgements We are grateful to Klaus Wenzel (Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH - GIZ), Robert Kelly, Kimberly Todd and Alexandra Soezer (United Nations Development Program - UNDP) and Philippe Crête (Food and Agriculture Organization FAO) for their very valuable feedback and review. All views expressed in this article are those of the authors and do not necessarily represent the views of those acknowledged here for their review and input. Contact person for this publication at Ecofys: Caroline De Vit, c.devit@ecofys.com This report is prepared and published as part of the MitigationMomentum project. This project is part of the International Climate Initiative. The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety supports this initiative on the basis of a decision adopted by the German Bundestag Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 3

4 Table of contents The Mitigation Momentum Project 6 Executive Summary Introduction MRV for NAMAs: status of discussions and experiences so far...12 The ABC of MRV Status of the MRV issues under the negotiations Overview of MRV experiences so far Transparency...18 Host countries expectations towards the MRV of NAMAs and associated support Funders expectations towards the MRV of NAMAs and associated support Accountability: rationale and limits Means of transparency: reporting and verification Robustness...23 How detailed and comprehensive should an MRV system be?...23 Current methodological challenges...24 How to demonstrate causal connections between the NAMA s activities and its impacts? Feasibility and cost effectiveness...28 Taking into account developing countries capacities and needs Progressive MRV: the tiered approach Cost management options Conclusion...31 References...32 Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 4

5 List of country examples Country example 1: Monitoring progress of mitigation actions towards Chile s economy-wide GHG target Country example 2: The challenge of associating emission reductions to specific activities in Tunisia Country example 3: Indonesia domestic reporting practices on the progress of provincial-level action Country example 4: Streamlining national and international reporting efforts in Chile...22 Country example 5: Taking a pragmatic decision on MRV of activities in Tunisia...24 Country example 6: Monitoring processes to identify further improvements and areas of support focus in Indonesia...24 Country example 7: Indicators to MRV sustainable development benefits in Peru...25 Country example 8: Taking into account the various capacities of the Kenyan NAMA stakeholders List of boxes Box 1: The SMART principles Box 2: Example of an advanced MRV system for supported NAMAs: Chile NAMA for self-supply renewable energy...17 Box 3: Transparency: wrap up messages...22 Box 4: Robustness: wrap up messages Box 5: Feasibility and cost-effectiveness: wrap up messages List of figures Figure 1: Desired NAMA impacts to consider for MRV Figure 2: Possible overlaps between supported and unilateral NAMA components Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 5

6 The Mitigation Momentum Project Mitigation Momentum provides assistance to five governments for the preparation of NAMA proposals: In Kenya, the NAMA proposal will combine a finance mechanism and capacity building to incentivise private sector engagement in large scale geothermal energy production. In Indonesia, Mitigation Momentum works with the national government and the provincial government of North Sumatra to develop a NAMA proposal for small scale renewable energy projects, as part of the provincial climate change action plan (RAD-GRK). In Chile, the NAMA proposal centres around a finance mechanism and technical support programme to stimulate adoption of renewable energy systems for self-supply (SSRE) across the industrial and commercial sectors. In Peru, the NAMA proposal focuses on a comprehensive programme to scale up waste-to-energy activities in the agricultural sector in the context of the country s wider renewable energy strategy. In Tunisia, the project supports the development of a NAMA in the building sector to drive energy efficiency and building integrated renewable measures. Country NAMA topic Key partners Summary Kenya NAMA on accelerated geothermal electricity development Ministry of Environment and Mineral Resources, Climate Change Secretariat and Ministry of Energy The development of a Kenyan geothermal NAMA proposal is anchored in the National Climate Change Action Plan , as geothermal is identified as a big win in terms of abatement potentials in the electricity generating sector. Kenya has a defined goal with regard to the development of geothermal power generation, and key policy documents are well aligned in that respect, however the development of an additional 4500 MW by 2030 remains ambitious. The involvement of the private sector and the capacity of actors (Geothermal Development Company; Ministry of Energy; Ministry of Environment and Mineral Resources) to manage and drive the growth in the sector appear to be the most critical elements to achieve Kenya s geothermal goals that can feasibly be supported by a pilot NAMA in this country. Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 6

7 Country NAMA topic Key partners Summary Indonesia NAMA to support small and medium scale renewable energy in the provinces North Sumatra and West Nusa Tenggara Ministry of Energy (ESDM), Ministry of Planning (Bappenas), and provincial equivalents The development of two pilot NAMAs for Indonesian provinces are anchored in the national and provincial climate change action plans (RAN-GRK/RAD-GRK). Although there is a feed-in tariff for renewable energy projects between 1-10 MWe, the uptake is slow and independent power producers (IPPs) face various barriers. This NAMA aims to establish a package of policies and actions that address these barriers and make the investment climate more attractive. The two provinces are strikingly different, and provide a good basis for analysing which elements need to be province specific, and which can be common. The aim of the national government is to use these NAMAs as pilots for the development of a national renewable energy NAMA. Country NAMA topic Key partners Summary Chile Self-supply energy systems based on renewable energy Centro de Energías Renovables (CER), Chilean Ministry of Environment, Fundacion Chile The objective of the NAMA is to reduce emissions by fostering self-supply renewable energy projects and contributing to the long-term development of the renewable energy industry in Chile. The NAMA will achieve the objectives through a comprehensive program of measures to remove barriers and incentivise SSRE investments with three components: a financial component, a technical support component and an outreach component. The financial component provides incentives to investment, the technical support component aims to improve national capacities in SSRE technologies and the outreach component aims to increase awareness of self-supply renewable energy options to stimulate demand. Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 7

8 Country NAMA topic Key partners Summary Peru Scaling up waste-to-energy activities in the Peruvian agricultural sector Ministry of Environment Agricultural activities contribute significantly to Peru s economy, some examples being the sugar cane industry, rice or coffee plantations and cotton. Substantial amounts of wastes occur and in most cases are disposed of locally, either burnt or left to rot on the fields. The objective of the NAMA is to promote the increased adoption of self-supply waste-to-energy technologies in the Peruvian agricultural sector to contribute to rural sustainable development and to global climate change mitigation. The NAMA wants to facilitate farmers and agroindustries access to capital to cover (up-front) investment costs of self-supply technologies, build capacity of beneficiaries of the NAMA program to establish, operate and maintain technologies and infrastructure to ensure their efficient and long-term use, and to promote the establishment of a waste-to-energy services and technology market in Peru. Country NAMA topic Key partners Summary Tunisia NAMA for energy conservation (energy efficiency and renewable energy) in the building sector Agence Nationale pour la Maîtrise de l Énergie (National Energy Agency) and Ministry of Environment The proposed NAMA for energy conservation (energy efficiency and renewable energy) in the building sector in Tunisia aims to reduce the demand for fossil fuel based energy in buildings, in particular that used for heating and cooling of buildings. It sits within the wider Tunisian national energy strategy and builds on existing national energy conservation programs in the building sector. The NAMA will comprise a program of activities and measures to address key barriers (financial, technology, knowledge barriers) to the implementation of energy conservation measures in the building sector. It also aims to achieve wider development benefits, including the creation of skilled jobs in the energy technology and building sector as well as reducing the country s dependence on fossil fuels. Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 8

9 Executive Summary Nationally Appropriate Mitigation Actions (NAMAs) are one of the cornerstones of the international climate negotiations. The term was first introduced in the Bali Action Plan of , where all Parties to the UNFCCC agreed to negotiate on Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity building, in a measurable, reportable and verifiable manner. The Mitigation Momentum project aims to support the development of NAMAs. It contributes to the concrete design of NAMA proposals in five countries (Peru, Chile, Indonesia, Tunisia, and Kenya). A further aim is to foster cooperation and knowledge exchange within the NAMA community while advancing the international climate policy debate on mitigation and related issues, including approaches for the Measurement, Reporting and Verification (MRV) of NAMAs. The objective of this paper is to identify open issues for the MRV of NAMAs pertaining to key dimensions of MRV, as recognised by MRV literature and UNFCCC texts, namely: transparency, robustness and feasibility and cost-effectiveness. It pays particular attention to NAMAs with a supported component 2 and reflects relevant experiences with developing NAMA proposals in the five Mitigation Momentum countries (i.e. using country examples where appropriate). As MRV systems for these NAMAs are still under development or at their preliminary stage, we hope to share further lessons learned in a subsequent discussion paper. Key challenges analysed in this paper include: How to design a MRV system that satisfies both host countries and funders expectations while complying with United Nations Framework Convention on Climate Change (UNFCCC) reporting requirements? How to draw the line between the MRV approach for unilateral components and the MRV approach for supported components, given that many NAMAs are likely to have both unilateral as well as supported elements? How to design a pragmatic, implementable MRV system in line with a country s capacities, which is robust at the same time? What does robustness mean in the context of the MRV of NAMAs? Transparency of mitigation actions and their impacts is a key principle in reporting progress on implementation to the UNFCCC and is a necessity for those stakeholders involved in the NAMA who need to assess its effectiveness from various perspectives. For instance, host countries would expect to use MRV to track progress towards domestic objectives - which could be either GHG related or non-ghg related - to improve policy design and implementation and to increase trust amongst NAMA stakeholders, in addition to complying with UNFCCC and funder requirements. On the funders side, more clarity is needed on the ideal level of transparency that reporting and verification processes should seek as well as on their expectations on the MRV of specific NAMA aspects, such as transformational impacts. Another finding on transparency is that attempting to link emission reductions to specific activities funded by multiple sources raises many issues, since emission reductions resulting from those activities could overlap. 1 The Bali Action Plan is the name given to the Decision 1/CP.13, which is the first Decision adopted by the Conference of the Parties to the UNFCCC (COP) in December 2007 at the 13 th COP. 2 In many cases, supported NAMA will include both components that benefit from international support and components that are domestically supported. Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 9

10 Robustness raises the question of the ideal level of comprehensiveness towards which a MRV system should strive in order to demonstrate credible information on NAMA impacts and progress as well as on support received. The paper concludes that the level of robustness of a MRV system will depend on the selected purpose of the MRV approach and the scope of the NAMA. Robustness does not necessarily mean that all impacts and activities are monitored, but rather that the most relevant ones are selected for monitoring on the basis of a pragmatic judgement which takes into account the capacities of relevant stakeholders. Robustness should therefore be interpreted within the limits of a country s capacities and may be considered as a progressive objective of a MRV system. Designing implementable MRV systems enables NAMA stakeholders to assess the NAMA from their own perspective and priorities and thus provides them with appropriate incentives to implement the NAMA MRV system. Another finding is that existing institutions, methodologies and guidelines provide a good starting point to develop MRV systems for NAMAs and key principles for the monitoring of GHG impacts. Pragmatism, understood as the balance between robustness, feasibility and cost-effectiveness, is crucial to adapt these methodologies and principles to the specificity of each NAMA. In such case, proportionality of effort should be a guiding principle. Some level of standardisation of NAMA specific methodologies is expected over the coming years to respond to some MRV challenges. However, a similar level of top-down standardisation as for Clean Development Mechanism (CDM) methodologies bears the risk of threatening the diversity of NAMAs and acting as a deterrent for countries to put forward innovative or complicated NAMAs. In some cases it may be more relevant to adapt NAMA specific methodological approaches developed for one country to the context of different countries without necessarily prescribing this approach at the international level. Feasibility and cost effectiveness of the MRV system are also important aspects to consider when designing the MRV system. Taking into account the NAMA s characteristics and country s MRV capacities enables the design of feasible and customised MRV system and process, which facilitates their effective implementation. Funders expectations regarding MRV can be managed through a tiered approach, under which MRV capacity improvements would lead to strengthened MRV systems and processes overtime, possibly following an agreed schedule with the funder if MRV capacity building activities are budgeted in the NAMA financial proposal. Furthermore, to ensure cost-effectiveness, cost management options could be considered, and possibly be discussed amongst funders and host countries. The MRV dimensions discussed here are of importance to different NAMA stakeholders, including the host country and funder(s). Although, expectations may differ in terms of indicators for judging effectiveness, they all could be met through a single MRV process. Meeting these expectations can, however, prove challenging if the MRV approach lacks feasibility or cost-effectiveness and does not allow stakeholders to assess the NAMA s effectiveness from their own perspective. Therefore, to design implementable systems and processes, MRV needs to be considered a supporting tool to implement and improve actions overtime by its users, rather than a burdensome system established for an external purpose. Although standardised solutions may provide useful common grounds for some MRV issues, in most cases the diversity of NAMAs may require approaches tailored to the selected purpose of the MRV system and to the host country s capacities. Sharing experiences with applying such approaches will provide further clarity on expectations from different stakeholders on the level of transparency, robustness, feasibility and cost-effectiveness for MRV systems. A second paper based on more advanced and final MRV plans for the five Mitigation Momentum countries will aim to share concrete lessons learned from NAMA related experiences. Besides, decades of development cooperation may provide valuable lessons and best practices on programme and impact assessment systems, which may be adapted to the context of NAMAs. Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 10

11 1. Introduction The Mitigation Momentum project aims to support the development of Nationally Appropriate Mitigation Actions (NAMAs). It contributes to the concrete design of NAMA proposals in five countries (Peru, Chile, Indonesia, Tunisia and Kenya). A further aim is to foster cooperation and knowledge exchange within the NAMA community while advancing the international climate policy debate on mitigation and related issues, including approaches for the Measurement, Reporting and Verification (MRV) of NAMAs. MRV enables the assessment of the effectiveness of both internationally supported NAMAs (supported NAMAs) and domestically supported NAMAs (unilateral NAMAs) by tracking NAMA impacts including greenhouse gas (GHG) emission reductions and non- GHG related impacts such as sustainable development benefits. MRV also supports improved policy design and decision making through systematic progress reporting and is a key tool to ensure accountability of NAMA stakeholders. Both host countries and funders share the common interest of having strong, implementable MRV systems in place. From both perspectives, this raises a number of questions, as well as potential challenges, on how to adapt the MRV approach to the specific circumstances of each NAMA. The objective of this paper is to identify open issues for the MRV of impacts of NAMAs, understood here as implementable actions, i.e. a project, a policy, a programme or a strategy. It pays particular attention to NAMAs with a supported component 3 and reflects relevant initial experiences with developing NAMA proposals in the five Mitigation Momentum countries (i.e. using country examples where appropriate). As MRV systems for these NAMAs are still under development or at their preliminary stage, we hope to share further lessons learned in a subsequent discussion paper. Key challenges analysed in this paper include: How to design a MRV system that satisfies both the host country s and funder s expectations while complying with United Nations Framework Convention on Climate Change (UNFCCC) reporting requirements? How to draw the line between the MRV approach for unilateral components and the MRV approach for supported components given that many NAMAs are likely to have both unilateral as well as supported components? How to design a pragmatic, implementable MRV system, which is also robust? What does robustness mean in the context of the MRV of NAMAs? Current NAMA experiences show that responding to these challenges requires taking into account the variety of NAMAs, as illustrated by those submitted to the UNFCCC (including economy-wide GHG reduction goals, sectoral strategies, mitigation policies, individual projects, etc.), and countries capacities. Although this paper does not aim to provide practical guidance, it will highlight areas where common guidance would be valuable to deal with such challenges. It will also point out areas where such guidance is limited de facto and where pragmatic approaches i.e. seeking a balance between robustness, feasibility and cost-effectiveness, may prove valuable to design feasible yet still robust MRV systems. Although this paper does not answer all questions it raises, it aims to offer innovative ways to respond to open issues, including through learning from country experiences. After a short introduction to basic MRV concepts and to the current status of discussions and experiences on MRV (Chapter 2), the paper is organised around key dimensions of MRV as recognised by MRV literature and UNFCCC texts: transparency (Chapter 3), robustness (Chapter 4), and feasibility and cost-effectiveness (Chapter 5). Challenges pertaining to these MRV dimensions are further explored in each chapter. 3 In many cases, supported NAMA will include both components that benefit from international support and components that are domestically supported. Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 11

12 2. MRV for NAMAs: status of discussions and experiences so far NAMAs are one of the cornerstones of the international climate negotiations. The term was first introduced in the Bali Action Plan of , where all Parties to the UNFCCC agreed to negotiate on Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity building, in a measurable, reportable and verifiable manner. Following this definition, a NAMA and support provided to the NAMA should be both subject to MRV according to the UNFCCC guidance. Most of the MRV guidance and requirements in the context of NAMAs that is available today have emerged from negotiations under the UNFCCC. Although this guidance has not necessarily been designed specifically for supported NAMAs, it provides a good indication of elements on which a MRV system for NAMAs should focus. In parallel to international MRV debates, in-country experiences with the development of MRV systems for NAMAs and on-going discussions among the community of potential NAMA funders provide insights into the status and challenges that relate to the MRV of NAMAs today. From such experiences and existing high-level guidance, key MRV principles and concepts for NAMAs can be deduced. The following ABC of MRV aims to clarify the basic MRV concepts to provide the basis for the subsequent discussions in this paper. The ABC of MRV MRV stands for Measuring (sometimes referred to as Monitoring) 5, Reporting and Verification. In the context of NAMAs, useful definitions of these concepts are: Measuring involves tracking the actions and the impacts of the NAMAs; Reporting involves transparent disclosure of selected information to national stakeholders and/or the international community, including NAMA funders; and Verification aims to ensure that the reported information is correct and complete. For each NAMA, an MRV approach that describes both the MRV system and MRV process is needed. The MRV system aims to assess the impacts of the NAMA, the progress in implementing activities under the NAMA and the support provided to the NAMA. Setting up the MRV system involves identifying the NAMA impacts and activities that will be monitored through specific quantitative or qualitative indicators. The MRV process, on the other hand, describes the ways in which the MRV system is implemented. Both require specific institutional arrangements, which will vary from one country to another. While both MRV system and process are designed by the host country, specific expectations from funders are often taken into account when designing system and process for supported components. 4 The Bali Action Plan is the name given to the Decision 1/CP.13, which is the first Decision adopted by the Conference of the Parties to the UNFCCC (COP) in December 2007 at the 13 th COP. 5 In the past years, the M of MRV has interchangeably stood for Measuring or Monitoring. The line between both terms is fine as one or the other could describe a specific action (e.g. installing a metering device to measure electricity consumption) or a more analytical task (e.g. processing and analyzing data from collected electricity bills). Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 12

13 Another important distinction to make when defining the MRV approach is between the types of NAMAs. The approach may differ depending on whether the NAMA relates to: a project (i.e. specific actions, typically localised capital investments in either infrastructure, technology or machinery undertaken by private or public organisations, with a pre-defined timeline); a policy or programme (i.e. concrete measures implemented by a government in order to promote or discourage technology options, impact economic activity or change consumer behaviour); or a strategy associated with a target (i.e. a framework under which mitigation measures and actions will be undertaken). Why MRV? There are many reasons for wanting robust MRV systems. Most importantly, MRV helps to track progress towards the achievement of the goal of the NAMA, to assess its impacts and the use of support. It enhances the transparency of policy making, building trust of in-country stakeholders as well as funders. At the national level, MRV systems help stakeholders to understand support needs and enable national policymakers to improve policy design and implementation. At the international level, comprehensive and consistent MRV systems can help to avoid double counting of emission reductions and help countries to demonstrate efforts towards the goal of limiting global temperature to 2 o C. How to MRV? As the implementation of MRV systems and processes depends on each country s capacities as well as particular national circumstances, there is no one size fits all format on how to MRV NAMAs. Principally, MRV is done through indicators which can be quantitative or qualitative variables, which are typically associated with a target value. For each goal of the NAMA (e.g. reducing the expected energy consumption increase in the residential building sector) one or more indicators need to be defined. The choice of indicators is an important step of the MRV system as the assessment of the NAMA impacts and implementation progress will be based on those indicators. The MRV approach will define how to monitor the indicators (i.e. how to collect the information), report the information and verify it. Applying the Specific, Measurable, Achievable, Relevant and Timely (SMART) principles to the goals of the NAMA will facilitate the implementation of MRV processes and help select SMART indicators (see Box 1). Box 1: The SMART principles An effective MRV system requires goals and indicators that are SMART: Specific, Measurable, Achievable, Relevant and Timely. SMART indicators facilitate development of a robust system that is adapted to local circumstances and the selection of realistic target values for each indicator. More specifically, the dimensions of the SMART principles mean: Specific: Definitions need to be precise, so that there is no room for interpretation whether the target associated with the indicator has been achieved or not. Measurable: It needs to be possible to assess the value of a dimension during or after the implementation of the activity. Achievable: The target needs to be realistically reachable through the activities within the set timeframe. Relevant: The indicator is helpful in showing whether the desired outcome has been achieved. Timely: The timeframe for reaching the target is clear. Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 13

14 What to MRV? MRV enables the assessment of both GHG and non-ghg related impacts of the NAMA, as well as the progress of activities under the NAMA. A third dimension of NAMA MRV is tracking the resources needed and support received from funders and spent on the NAMA. While direct emission reductions are often seen as the most obvious impact of the NAMA, transformational changes and sustainable development benefits are also of prominent importance (see Figure 1). These transformational changes could lead to indirect emission reductions and increased mitigative capacity. Mitigative capacity refers to the ability of a country to reduce GHG emissions through using the NAMA to address structural changes, which enable emission reductions in the long term, sometimes even outside the scope of the NAMA (e.g. establishing a strong MRV system for several sectors, designing a consistent legal framework, or supporting conditions on financial markets, etc.). Besides GHG mitigation impacts, a NAMA will usually aim to contribute to the achievement of sustainable development benefits (as being nationally appropriate, NAMAs are in line with, and support, a country s development objectives). Sustainable development benefits include positive environmental impacts such as better air and water quality or decreased soil erosion, etc. They may also include social impacts (e.g. rural development, health, gender equality, access to education, etc.) and positive economic impacts such as employment, creation of markets, development of industries etc. For instance, sustainable development impacts assessed for the for the self-supply renewable energy NAMA in Chile include: the creation of jobs through renewable energy projects financed by the NAMA; reductions in environmental pollutants, noise and noxious odours from project sites; the reductions in energy usage and costs and the improvement of energy security at the national and local level. NAMAs can also have unintentional negative impacts, such as increased costs in a certain area or disadvantages for groups not targeted by the NAMA, which could be accepted as a trade off for low carbon development. Those, and other unexpected negative externalities, need to be MRVed as well in order to collect knowledge necessary for comprehensive evaluation and improvement of the NAMA. NAMA objectives Greenhouse gas mitigation Direct emission reductions Transformational changes Other enviromental impacts Social impacts Economic impacts Figure 1: Desired NAMA impacts to consider for MRV Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 14

15 In addition to monitoring the impacts of the NAMA, it is useful to monitor progress of implementation of the activities under the NAMA. While MRV of impacts monitors the achievement of objectives through impact indicators (e.g. tco 2 e reduced, reduction in energy consumption, number of banks offering suitable loans for energy efficiency, etc.), MRV of progress looks at whether the planned NAMA activities have been fully implemented at the time foreseen through progress indicators (e.g. trainings delivered, strategy on subsidisation developed, etc.). Both dimensions are important for the success of NAMAs and learning for future activities. However, they need to be approached differently and with distinct sets of indicators. Additionally, the MRV system should reflect the support received (financial, technological and capacity building) and track those flows, including how support relates to the different components of the NAMAs. Transparently disclosing where resources are spent significantly increases trust and enables possible redistribution of support where needed. Transparency does not necessarily mean that disclosure is made to the general public; disclosure of sensitive information can be limited to specific host country and funding institutions. Status of the MRV issues under the negotiations MRV is a key pillar of both the UNFCCC and the Kyoto Protocol. It is also a sensitive issue that is still being discussed at the international level, especially with regards to the scope of international guidelines to assess progress of mitigation actions and their impacts. It is also a key aspect of the discussions on Reducing Emissions from Deforestation and forest Degradation (REDD-Plus), for which MRV systems are being developed for the forestry sector in developing countries on the basis of international guidelines and existing forest monitoring systems. Under the Kyoto Protocol, MRV is essential to keep track of emission reductions of countries with legally binding commitments, and it is a core aspect of the Clean Development Mechanism (CDM). While the UNFCCC does not provide specific requirements for the measurement or monitoring of NAMAs, it has produced guidance for reporting and/or verification purposes of mitigation actions in general (thus including NAMAs). For instance, on reporting, National Communications that are required from developing countries every four years (or on a discretionary basis for Least Developed Countries and Small Island Developing States) should include basic information on mitigation actions and their progress. National GHG Inventories that are included in the National Communications are also expected to reflect impacts from mitigation actions. Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 15

16 More detailed reporting and verification requirements have been adopted and further developed since 2010, including the submission of the Biennial Update Report (BUR), which is subject to the process of International Consultation and Analysis (ICA) six months after the BUR submission (BURs are also submitted on a discretionary basis by Least Developed Countries and Small Island Developing States). Developing countries are required to indicate in the BUR specific information on mitigation actions, including both domestic and supported NAMAs 6. In addition, the UNFCCC NAMA Registry provides another opportunity to submit voluntary information on NAMAs. Although the Registry does not constitute or support any MRV process, information that countries submit to the Registry on their NAMAs may overlap or complement the information submitted through the BUR 7. Regarding verification processes, ICA provides an official process to increase transparency of mitigation actions and their effects and consider the progress made in their implementation 8, without distinguishing between supported and unilateral NAMAs. It also aims to provide an opportunity to share views with other countries and may eventually contribute to building MRV capacities of developing countries. As no country has undertaken the ICA process yet, consequences and depth of the analysis remain unclear today. Therefore, current UNFCCC guidance provides an indication of the information required for international reporting and verification. The voluntary MRV guidelines for unilateral NAMAs, to be adopted at 19 th Conference of the Parties (COP) in Warsaw, are also anticipated to provide guidance for setting up national MRV processes, from which any MRV system for NAMAs could benefit. However, additional NAMA specific information and guidance are needed to design and implement a NAMA MRV system, such as monitoring requirements or expectations from funders on MRV. Current MRV experiences, including those that do not relate to NAMAs, are valuable sources of information in that regard. Overview of MRV experiences so far While MRV of NAMAs is still in a fledgling state, the general concept of MRV of actions has been commonly used in policy making and development cooperation for a long time. Some countries have gained knowledge on how to track progress of specific measures in terms of resources spent according to indicators. In many cases, governments also track their pathway to achieving certain targets such as the Millennium Development Goals or, more generally, economic growth. The level of experience with such practices varies from country to country. 6 According to Decision 2/CP.17 (UNFCCC, 2011), Annex III, developing countries shall indicate for each mitigation action the following information : Name and description of the mitigation action, including information on the nature of the action, coverage (i.e. sectors and gases), quantitative goals and progress indicators; Information on methodologies and assumptions; Objectives of the action and steps taken or envisaged to achieve that action; Information on the progress of implementation of the mitigation actions and the underlying steps taken or envisaged, and the results achieved, such as estimated outcomes (metrics depending on type of action) and estimated emissions reductions, to the extent possible; Information on international market mechanisms. 7 According to Decision 2/CP.17, countries are invited to indicate the following information for NAMAs for which they seek international support: A description of the mitigation action and the national implementing entity, including contact information; The expected time frame for the implementation of the mitigation action; The estimated full cost of the preparation; The estimated full cost and/or incremental cost of the implementation of the mitigation action; The amount and type of support (financial, technology and capacity-building) required to prepare and/or implement the mitigation action; The estimated emission reductions; Other indicators of implementation; Other relevant information, including the co-benefits for local sustainable development, if information thereon exists. 8 UNFCCC (2011), Decision 2/CP.17, Annex III, para. 1 and 3. Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 16

17 Some developing countries have had exposure and gained familiarity with MRV through CDM projects, GHG Inventories for National Communications and through applying Global Environmental Facility (GEF) methodologies to calculate GHG benefits of GEF funded projects. The practical knowledge of basic MRV principles gained from monitoring GHG emission reductions is, however, primarily limited to technical aspects of specific projects, which tends to exclude two key features of NAMAs, namely the monitoring of impacts of policies and of sustainable development benefits. Various international initiatives to build NAMA MRV capacities of developing countries and share knowledge are underway. Examples include the GIZ NAMA tool 9, the UNDP s Low Emission Capacity Building Programme (LECB) 10, the United States Government s Enhanced Capacity for Low Emissions Development Strategies program 11, the World Resources Institute s (WRI) Measurement and Performance Tracking (MAPT) project 12, and the International Partnership on Mitigation and MRV 13, which organised, for example, the Autumn School MRV: Today, Tomorrow, and the Future in Despite the lack of experience and international guidance on the MRV of NAMAs, most countries that are developing NAMAs expect to design and implement MRV plans. Although none of them have complete and detailed MRV systems yet, some NAMAs are more advanced than others in terms of MRV. For example, the Chile NAMA for self-supply renewable energy includes an advanced monitoring plan (Box 2). Box 2: Example of an advanced MRV system for supported NAMAs: Chile NAMA for self-supply renewable energy As the coordinating agency of the NAMA, the overall MRV responsibility of the Chile NAMA for self-supply energy will rest with the Renewable Energy Centre (CER) of Chile. CER is part of the Chilean government s economic development agency (CORFO) and implementing agency of the Energy Ministry. The NAMA monitoring will be fully integrated into the MRV system currently being set up at the CER which in turn will be fully integrated into national MRV systems and help comply with international MRV requirements. MRV will take place at three different levels: Installation level data collection on sites where self-supply renewable energy projects take place Programme level - validation and aggregation of installation level data, monitoring of programme-level indicators, reporting of compiled data National and international level: - Reporting at national level through a domestic mitigation registry - Reporting at the international level - Aggregation of data on NAMA support provided Different indicators have been selected to assess some key objectives of the NAMA. Regarding GHG emission reductions, indicators include renewable energy capacity installed and produced, as well as energy consumption determined at the feasibility stage (which also contributes to setting the baseline). This requires the collection of specific data such as energy production data, default emission factors for fuels used and default grid factors for power consumption. Regarding sustainable development benefits, reduction of energy costs will be monitored through collecting data on energy produced on site, operational costs, amount of total energy needed and energy market prices. 9 GIZ (2013) national_sub-nationalstrategies/low_emission_capacitybuildingprogram.html Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 17

18 3. Transparency Transparency of mitigation actions is a key principle in reporting progress on implementation to the UNFCCC and a necessity for those stakeholders involved in the NAMA who need to assess its effectiveness from various perspectives. From a NAMA standpoint, transparency aims to satisfy both funder and host country expectations and ensure their respective accountability. Reporting and verification processes are essential tools for the transparent assessment of effectiveness and to ensure NAMA stakeholders remain accountable. Host countries expectations towards the MRV of NAMAs and associated support Some developing countries have built certain capacities to track development indicators in order to assess the effectiveness of various public policies and programmes. For instance, several countries have worked on the formulation of sustainable development indicators, such as the Philippines, which started developing indicators in September Although those often do not relate to GHG impacts, monitoring and evaluation processes are not a new concept for most developing countries. From a developing country s perspective, MRV of mitigation actions is expected to support efforts to comply with UNFCCC reporting requirements (i.e. to submit National Communications and BURs) and, if applicable, with funders requirements. For example, Chile is planning to implement a domestic mitigation registry to comply with UNFCCC reporting requirements. Besides, MRV is also expected to help track progress towards domestic objectives, such as either GHG related goals (e.g. national emission reduction goal) or non-ghg related goals (e.g. the decrease of poverty or the creation of local businesses). Country example 1: Monitoring progress of mitigation actions towards Chile s economy-wide GHG target Chile has a GHG target of 20% below the business-as-usual scenario by the year The country is implementing a national registry of all domestic and supported mitigation actions, including NAMAs, to track its progress towards achieving this goal. The registry will track basic information on each action with a consistent methodology that will allow Chile to fulfil international reporting requirements. The tracking of non-ghg related development objectives is also of great importance to host countries. Indicators that relate to sustainable development (e.g. improved energy security) are therefore essential to assess the effectiveness of the NAMA from the host country s standpoint. Furthermore, there are many other indicators that are linked to GHG emission reductions, such as energy and fossil fuel subsidy savings, which could be used to assess both climate and development effectiveness. Still, from the host country s perspective as well as from the perspective of other national NAMA stakeholders, MRV is expected to provide the necessary information and tools to track the effective implementation of NAMA activities, including policy and regulatory interventions, and the distribution of responsibilities, if necessary. Therefore, MRV would enable the collection of evidence through reporting systems and sharing feedback. If associated with appropriate decision making processes, it would contribute to the improvement of policies overtime. MRV is also a key tool to systematise engagement with NAMA stakeholders in order to discuss improvements and responsibilities and to identify best practices. In some cases, MRV is also expected to provide a system for NAMA stakeholders, including private entities, to assess their performance against their own objectives. 15 UNDESA (2007). Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 18

19 In terms of support, although MRV of both international and domestic support aims to respond primarily to international requirements (i.e. from funders and the UNFCCC), it also fulfils host countries expectations. MRV helps to assess the effectiveness of domestic support and the alignment of the delivery of support with national priorities on a regular basis. Funders expectations towards the MRV of NAMAs and associated support Funders expectations on MRV raise the question of funding decision criteria, which helps identify indicators of importance to funders. As of today, multiple funding opportunities exist; however, funding criteria have not been clearly or consistently set for all of them. Although they are likely to be funder specific and be inspired from criteria used for development projects, yet some common themes are emerging. As the primary objective of NAMAs is to reduce GHG emissions, it is anticipated that NAMA funders will assess effectiveness of support based on the NAMA outcomes in terms of emission reductions. For funding sources like the Green Climate Fund (GCF), which is clearly mandated to support mitigation actions, GHG emissions and costs are likely to be important criteria. However, it is increasingly clear that NAMA funders will also expect to assess transformational changes related to long term mitigation impacts due to increased mitigative capacity and will look at the potential of the NAMA to be replicated in other sectors (see Chapter 2). For example, the NAMA Facility has designed a system that allows ranking projects according to their overall level of ambition, including potential for transformational change, co-benefits, financial ambition and mitigation potential 16. This consideration of mitigation potential may raise the following potential issue, which has been faced by some CDM projects already. If direct emission reductions are the funders focus, NAMAs with low direct mitigation impacts in the short term and large indirect mitigation potential in the longer term may encounter difficulties accessing climate finance. As under the CDM, where modalities to ensure balanced geographical repartition of projects were adopted, innovative solutions to ensure that climate finance does not neglect NAMAs with lower immediate GHG impacts may be needed. This is a likely discussion in the coming months under the GCF and probably within other funding institutions. Sustainable development benefits may also be of interest to funders, especially for development institutions such as development banks and agencies, which have experience in tracking development impacts. To harmonise efforts on assessing GHG impacts, some multilateral development banks and international financial institutions are working towards a Framework for a Harmonised Approach to Greenhouse Gas Accounting 17. In line with the UNFCCC traceability requirements for support (i.e. domestic vs. international support and public vs. private support), funders will also expect to track the use of the support they provide (including, for example, the leverage ratio for private sector funding) and the associated impacts through robust MRV systems. Expectations from funders towards robustness are not yet clear: this is discussed in the next Chapter. Current experiences point at challenges to differentiate between the impacts of various sources of support, including between domestic and international support and between various international sources of support. Attempting to link emission reductions with specific activities funded by multiple sources raises many issues, since emission reductions resulting from those activities could overlap (see Figure 2). For instance, in many countries, capacity building activities are an indispensable enabler of emission reductions. In most cases, it is not possible to attribute specific emission reductions to those activities (see also Chapter 4). 16 DECC (2013) Measuring, Reporting and Verification for Nationally Appropriate Mitigation Actions I 19